Turning public sector buildings into mini-power stations

It’s likely that every public sector building will have a solar installation on a flat or south-facing rooftop by 2025. But only those who act now will benefit from subsidies, writes Robert Goss, MD Conergy UK

There are not many chances in life to do the right thing and improve the bottom line. Right now, there is an excellent opportunity for the managers of public sector buildings to take advantage of existing subsidies to lower their energy outgoings or generate cheaper energy for tenants. Using the energy produced locally also reduces transmission losses – read “waste” – and takes pressure off the grid.

In fact, it may surprise you to learn that when it comes to solar photovoltaic (PV) power, Britain is now Europe’s leading nation with more than 2,000 megawatts (MW) being installed last year.

The UK government’s position is that solar PV is an important part of its energy portfolio, ranking alongside nuclear, gas, coal and wind. But while solar supports 16,000 jobs up and down the country, from Devon to Durham, just a handful of the nation’s council offices, hospitals, schools and social housing have been kitted out with panels so far.

Government planning data show that almost all very large solar projects, which tend to be ground mounted, are privately owned. One notable exception is a publicly owned project at a former RAF base where Norfolk County Council is building a 50 MW solar farm, under a 25-year lease to a renewable energy company.

The growth of solar has been meteoric. A decade ago, solar panel prices were as high as £4.00 per watt, and the global market for solar was 500MW installed per year. That is equivalent to the peak production of one small gas power plant. Today, prices are around £0.40 per watt, and the global market in 2014 was over 42,000MW – equal to the peak capacity of more than 40 nuclear power stations.

Remarkably, the size of the UK market puts us ahead of much sunnier Mediterranean countries. Britain even installed more solar panels than Germany last year, where nearly 6 per cent of electricity already comes from solar. Germany is still the world leader in cumulative installed capacity, but we are growing fast, and are likely to be the biggest European market for solar again this year.

Utilities are undergoing a seismic shift as a result of solar power. Last December Germany’s biggest utility, E.ON, decided to hive off all its conventional fossil fuel generation to focus on renewables and energy services. E.ON said that its new strategy was a result of rising renewable energy competitiveness. The same will happen here.

Solar farms of up to 15 acres are eligible for Renewable Obligation Certificates (ROCs) which utilities are required to acquire to meet targets for renewably produced electricity, and have been hugely successful. However the government increasingly favours the installation of solar on rooftops and there is a significant opportunity for public sector buildings – especially those with plenty of roof-space.

The government favours rooftops for three reasons. First, energy losses in the UK grid are significant – around 7.2 per cent. This is reduced by using energy generated locally, by workers in public buildings during the day for example, rather than by feeding it into the grid. Secondly, because roof-top solar power generates about three times more jobs per megawatt installed than large, ground-mounted solar farms. And thirdly, because Britain has significant manufacturing capability in manufacturing solar components including panels, mounting systems and meters.

For the same reasons, solar panels are attractive in social housing, where they can also help the less well-off by cutting energy bills and keeping prices down and predictable long-term. Much of the benefit to date from solar power has gone to large landowners for solar farms, so more installations on social housing would be a welcome community benefit.

Solar in Britain has a load factor of a little more than 10 per cent, which means that averaged over the year, including night-time, an installation will generate power equivalent to about a tenth of its capacity, about the same as in Germany. To maximise yield and revenues, you must get as close to this 10 per cent figure as possible.

This does not necessarily mean a south-facing installation. If most of the electricity consumed on-site is at lunchtime this can make sense, but it is often better to go for an east- or west-facing installation, which generate more electricity during the morning and afternoon. Worth noting that there is of course some difference between the north and south of the country, but solar panels are still cost-effective in the highlands of Scotland.

Solar installations on rooftops earn money from government feed-in-tariffs, which are still very cost-effective because of huge declines in technology and installation costs thanks to the boom in the industry. There are increasingly attractive financing schemes available, and operating and maintenance costs are very low.

For managers of public buildings, it is worth considering that the government is beefing up support for large roof-tops. For the first time they will distinguish between large roof-tops of between 50 kilowatts and 5 megawatts, and solar farms. Incentives for solar fall as they are used up, so this move will ring-fence the roof-top market for longer, giving finance directors more time to plan installations

The government is also trying to make it easier for landlords and tenants to have solar panels installed, and is consulting on changes to allow both tenants and landlords to physically transfer an installation, if they move. The aim is to lower investment risk and increase the flexibility of the scheme. This move is expected to open up a big new market for the solar industry. Central government is also taking a lead as the owner or tenant of its enormous public estate of government offices, Ministry of Defence buildings, and the vast Crown Estate, which includes prime retail and leisure property.

According to Bloomberg New Energy Finance, Conergy is a top-five solar developer in Britain, and we have invested considerably in our rooftops team. We bring huge experience from around the world to local installations, and are well-versed in the particular needs of the public sector. We urge building owners to act now. Recent research showed that large-scale, roof-top projects may be the first solar sector to be competitive without subsidies. Because these buildings are occupied in the daytime, when the sun is shining, they make a small profit through savings on utility bills, before accounting for the subsidies. It is very likely therefore there will be no subsidies in a few years.

Smart managers of public buildings are seizing the opportunity of current subsidies to create a long-term revenue stream and cut their energy bills. And they are backed by the government. Last April, the then energy and climate minister Greg Barker said the government aimed to install up to 1,000 MW of solar PV on public land and buildings. Substantial progress is expected in 2015. Together we can make that relatively modest ambition a reality.

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